Are you on track to your financial goals?

There is a lot of conversation around creating financial independence, working for oneself, creating passive income, etc. Many of these “goals” can seem quite lofty if you haven’t begun to explore a foundational component of your financial picture. Net worth.

Your net worth is essentially the total of what you own (your assets) minus what you owe (your debts). It is a great metric for tracking the progress you’re making toward your goals. It tracks both the growth of your assets (how much your home appreciates every year, how your portfolio or savings balances grew, etc.) and how much reduction you have seen as you pay off debt (how much your balance is reduced with every credit card, student loan, or mortgage payment you make).

While you might know exactly what your fixed monthly payments are, or what percentage of your salary you routinely set aside into savings, seeing these values on paper every few months, can be a very powerful way to obtain clarity on your financial situation and gauge the progress you are making toward your goals, and make changes if you decide.

Tracking your net worth can be done many ways. There are free resources out there like apps or pre-made spreadsheets online. You can do so in a simple excel document. You can put pen to paper and write it all down by hand. The best method? The one that is going to, not only, hold you accountable for looking at these numbers, but also create a vested interest in evaluating what is changing over time. A method that keeps you proactive.

One worry which may come up before doing this exercise is the possible result of a negative net worth. This practice is merely that, a practice. It helps you take the most important first step, which is being aware of what you own and owe. From there you can take steps towards moving into positive net worth territory.

Remember that money coming in is not the only measure of financial success because earning money does not equate to building wealth, although a very crucial piece. Not only setting goals, but more so monitoring progress and working closely with your financial planner can be the most critical pieces to creating wealth.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.